QIHU has a 3B market cap whereas SOHU has a 1.5B market cap. Buyouts usually include around a 20-40% premium to the price, so it would seem BIDU would be eyeing SOHU over QIHU. SOHU's new search engine will include the google function where it offers suggestions to what you might be searching.. I love this goog function and SOHU looks to take 10-15% of search marketshare. I think paying around 4B for a QIHu buyout is too much for BIDU, but paying around a 2.0B for SOHU is doable.
If Baidu buys Qihoo (unlikely), it'll be a DROP for Baidu, initially. Keep in mind that Qihoo is a minute fraction of Baidu's business, so a buyout would not be a valuable investment right now. Better to let Qihoo run with their ball for 9-12 months and see what business they drum up. Then, if they truly become a meaningful business entity, it would be a wise purchase.
Actually, i have to correct myself. Qihoo's doing pretty well, and their net is better than i had seen a while back. So, maybe a buyout could be accelerated a bit. But regardless, my feeling still is that they should be allowed to run for a while before any money is put on the table for them.